IBM, Coke earnings lift US stock indexes

By MATTHEW CRAFT, AP Business Writer
| 9:36 a.m.July 19, 2011

In this July 18, 2011 photo, specialist Neil Gallagher, foreground right, works at his post on the floor of the New York Stock Exchange. Lackluster world stocks got a boost Tuesday, July 19, from an early rebound in Europe and the U.S. as debt worries that have shadowed both regions in recent days kept Asian markets largely in check. (AP Photo/Richard Drew)
— AP

In this July 18, 2011 photo, specialist Neil Gallagher, foreground right, works at his post on the floor of the New York Stock Exchange. Lackluster world stocks got a boost Tuesday, July 19, from an early rebound in Europe and the U.S. as debt worries that have shadowed both regions in recent days kept Asian markets largely in check. (AP Photo/Richard Drew)
/ AP

NEW YORK 
Strong profits and a bipartisan plan to lift the U.S. debt limit drove a stock market rebound on Tuesday.

Stock indexes rose after Coca-Cola, IBM and other companies reported rising second-quarter earnings. The three major indexes added to their gains after President Barack Obama praised a proposal by six senators that would cut debt by $3.7 trillion over the next decade and raise the country's $14.3 trillion debt ceiling.

The Dow Jones industrial average gained 194 points, or 1.6 percent, to 12,580 in afternoon trading, reversing its 95-point slump from Monday.

"It looks like there's bipartisan support for a robust plan," said Burt White, chief investment officer at LPL Financial in Boston. "The stock market had been looking for a reason to have a relief rally. And it looks like they got the start of one today. "

The ongoing deadlock in Washington over raising the country's borrowing limit and Europe's debt crisis have been weighing on markets this month. The Dow slid five of the previous seven days.

Tuesday's gains pushed the three major indexes higher for the month. The Dow and Nasdaq are now up more than 1 percent in July.

Coca-Cola Co.'s income rose 18 percent in the second quarter on stronger sales overseas. The world's largest beverage maker raised some prices to offset higher ingredient costs. Coca-Cola's stock was up more than 3 percent.

KeyCorp rose more than 3 percent after the Cleveland-based banking company reported a jump in earnings thanks to a drop in loan losses. Net income of 25 cents a share was up from 3 cents a share a year ago.

Harley-Davidson Inc. rose 10 percent, the most of any stock in the S&P 500 index. The motorcycle maker reported its first increase in U.S. sales since the final quarter of 2006. Sales of its motorcycles, some of which sell for more than $30,000, had languished throughout the economic slump.

A jump in housing construction lifted the stocks of Lennar Corp. and D.R. Horton Inc. The Commerce Department said building of new houses and apartments jumped 14.6 percent in June from the previous month. Single-family house construction rose 9.4 percent, the largest increase since June 2009, the month that marked the end of the recession. Much of the monthly increase, however, came from new apartment buildings.

Two weeks are left before the Treasury Department says the government must lift the country's $14.3 trillion borrowing limit or risk defaulting on its obligations.

House Republicans are still preparing to vote on a plan that would lift the debt ceiling but also slash spending. The proposal includes a balanced-budget amendment to the U.S. Constitution. President Barack Obama pledged to veto the bill.